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Codere Rejects Creditor Restructuring Proposal as Deadline Looms

Codere SA formally rejected a final restructuring proposal from bondholders less than three months before the Spanish gaming company’s deadline to agree to a restructuring or request full creditor protection.

The plan bondholders submitted Feb. 2 doesn’t treat shareholders equally by allowing minority shareholders to have 3.2 percent of Codere and the founding Martinez Sampedro family 14.3 percent, the company said in a statement. The proposed debt structure is not the best solution for the company, which needs to lower its interest payments, Codere said.

Codere, which manages betting parlors and race tracks in Spain, Italy and Latin America, sought preliminary creditor protection Jan. 2. The ruling gave it as long as four months to reach an agreement with debt holders while the Martinez Sampedro family fights to retain as much control as possible. The company wishes to continue negotiations with bondholders to reach an agreement by May 2, Codere said today.

“The board would not back any possible restructuring that doesn’t guarantee equality among all shareholders,” the company said in the statement.

The bondholder proposal would breach Spanish law and doesn’t allow the company to moderate the cost of its debt, Codere also said.

Codere failed to meet a Feb. 6 deadline for a restructuring deal set by creditors and defaulted on a 127.1 million-euro ($174 million) loan. The company had been given the opportunity to extend the loan to April 15 if it reached a deal with bondholders.

Codere missed a 9.25 percent coupon payment on its dollar notes maturing in February 2019 today and will use a 30-day grace period, it said Feb. 14.

Bondholders proposed a new 200 million-euro five-year senior loan facility and 200 million euros of equity through a rights issue, according to a Feb. 5 statement from Houlihan Lokey, an adviser to the group. Under the deal, Jose Antonio Martinez Sampedro would have remained chief executive officer and chairman of the group’s board of directors.

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